The UK Government has apologised unreservedly to Libyan Abdul Hakim Belhaj and his wife, Fatima Boudchar, after claiming an MI6 tip-off led to their capture and his torture by Colonel Gaddafi's forces.

The “full and final settlement” includes a £500,000 payment to Ms Boudchar, who was six months pregnant at the time of her capture, although this is being made without any admission of liability.

In a Commons statement, Jeremy Wright, the Attorney General, said that Theresa May had written to Mr Belhaj and his wife to apologise for the "appalling" treatment they had received.

He explained how Mr Belhaj had always made clear that he was not seeking monetary compensation and would not receive any.

In a statement issued by his lawyers, Mr Belhaj said: "I welcome and accept the Prime Minister's apology, and I extend to her and the Attorney General my thanks and sincere goodwill."

Ms Boudchar, who was in the Commons with her 14-year-old son Abderrahim to hear Mr Wright's statement, said: "I thank the British Government for its apology and for inviting me and my son to the UK to hear it. I accept the Government's apology."

Sapna Malik, from law firm Leigh Day, who represented Mr Belhaj and Ms Bouchar, said: "Today's historic occasion is a tribute to the resilience of our clients in their quest for justice.

"After six long years of litigation, HM Government has rightly acknowledged that, even in the fields of counter-terrorism and international relations, there are lines which must not be crossed and which were crossed here, with devastating consequences for my clients.

"Today's candid apology from the Government helps restore the humanity and dignity so brutally denied to my clients during their ordeal and is warmly welcomed."

Mr Belhaj was a leading opponent of Colonel Muammar Gaddafi and says he was abducted in 2004 in Bangkok along with his pregnant wife while attempting to fly to London to claim asylum in the UK.

Now a politician in Libya, he spent six years in prison upon his return to the country, while Moroccan-born Ms Boudchar was released shortly before giving birth.

Mr Wright read out the letter Mrs May had written to the couple, which said the Government's actions had "contributed" to their rendition.

The letter said: "Your accounts were moving and what happened to you is deeply troubling.

"It is clear that you were both subjected to appalling treatment and that you suffered greatly, not least to the dignity of Mrs Boudchar, who was pregnant at the time.

"The UK Government believes your accounts. Neither of you should have been treated this way. The UK Government's actions contributed to your detention, rendition and suffering.

"The UK Government shared information about you with its international partners. We should have done more to reduce the risk that you would be mistreated.

"We accept this was a failing on our part," she said.

The letter added: "On behalf of Her Majesty's Government, I apologise unreservedly. We are profoundly sorry for the ordeal that you both suffered and our role in it. The UK Government has learned many lessons from this period."

Labour’s Nick Thomas-Symonds, the Shadow Solicitor General, said the whole House would sympathise with Ms Boudchar and Mr Belhaj having "suffered such appalling treatment at the hands of others".

He said: "What's happened to them both is deeply disturbing and I can only hope that the settlement of the legal case allows some closure to a terrible set of events in their lives.”

Mr Thomas-Symonds said the PM was "entirely right" to have written to Mr Belhaj and Ms Boudchar to apologise for the treatment they received.